Guides

Tax Guide: Self-Employment & Deductions

Gig drivers owe self-employment tax (15.3% Social Security + Medicare) plus income tax, with no automatic withholding. Use WillDrivingPay to set weekly cash aside, compare the IRS standard mileage rate ($0.76/mile Jul–Dec 2026) against actual expenses, and open a city deep link for local planning rates. Not tax advice—see the methodology.

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1. Understanding Self-Employment Tax

As a gig driver (independent contractor), you are responsible for paying self-employment taxes—currently 15.3% in the U.S. for Social Security and Medicare (combined employee + employer shares). Unlike regular W-2 employees, no tax is withheld from your payouts automatically.

Use the self-employment tax toggle in WillDrivingPay to estimate this cost so you can set aside cash weekly before paying yourself. Presets also include a 12% federal income-tax planning set-aside plus state wage rates from the Tax Foundation 2026 tables.

2. Standard Mileage vs. Actual Expenses

When filing taxes, you can deduct the cost of operating your vehicle using one of two methods:

  • Standard Mileage Rate — Deduct a flat rate per business mile. For July 1–December 31, 2026 the IRS business rate is $0.76 per mile (IRS standard mileage rates, IR-2026-29). This is simple, requires a mileage log, and often wins for fuel-efficient cars.
  • Actual Expenses — Deduct the real costs of gas, oil changes, repairs, tires, insurance, registration, and vehicle depreciation. This requires saving every receipt and calculating the business-use percentage of your vehicle.

Our calculator shows you the IRS rate deduction side-by-side with your enabled actual expenses so you can evaluate both methods. Track miles properly with the mileage tracking guide.

3. Write-Offs Beyond the Vehicle

In addition to driving costs, you can deduct other expenses that are ordinary and necessary for your business:

  • Phone Plan — A percentage of your monthly cell phone bill matching your business usage.
  • Passenger Amenities — Chargers, water bottles, and masks provided to passengers.
  • Road Tools & Tolls — Dashcams, mounts, tolls, and parking fees paid while working.
  • Software & Fees — Subscriptions to mileage tracking apps, music services for passengers, and platform fees.

Confirm eligibility with a tax professional and the IRS Self-Employed Tax Center.

4. Best Practices for Gig Tax Planning

  • Track every mile. Log miles from the moment you turn on the app looking for orders until you turn it off. Commute miles to your first start and home from the last drop-off are often deductible if you keep the app active—verify with your advisor.
  • Save receipts. Use scanner apps to digitally save every gas, maintenance, and phone bill receipt.
  • Pay quarterly estimates. If you expect to owe more than $1,000 in taxes, pay quarterly estimated taxes to avoid underpayment penalties.

Model tax set-asides in a real market

Open a calculator deep link, enable tax toggles, and see the weekly set-aside—no invented earnings claims:

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